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Disney Gadflies Buzzing Again

Once again there's discontent brewing at Disney(DIS - Get Report), though it's a much milder strain than the one that nearly tore the media company apart last winter.

Disgruntled former directors Roy Disney and Stanley Gold said Tuesday they would withhold their votes for board members at the company's annual meeting this week. But unlike last year, when Gold and Disney spearheaded a no-confidence effort targeting certain Disney board members, the two ex-directors said they hadn't conducted a campaign to ask other shareholders to withhold their votes for the complete slate.

The announcement, combined with relatively muted criticism of Disney's board from other quarters, heralds a Disney annual meeting likely to be less contentious than the splenetic scene that unfolded at last March's annual meeting in Philadelphia. At that meeting, an unprecedented 45.2% of votes were withheld for CEO Michael Eisner's re-election to Disney's board. That vote led to Eisner's replacement as chairman by then-presiding director George Mitchell, who had received a 25.6% "withhold" vote himself.

This year's meeting is slated to start at 11 a.m. EST Friday at the Minneapolis Convention Center.

In their statement Tuesday, Disney -- the nephew of Disney founder Walt -- and Gold said their vote this year rests on the question of whether Disney's board has adequately addressed the issues raised by the no-confidence vote at last year's meeting.

The key to answering whether the board has reformed itself, say the ex-directors, lies in how it conducts and implements the search for Eisner's successor as CEO. The board
said last September
that by June 2005 it would name a successor CEO to Eisner, whose contract expires in 2006.

"We are waiting to see whether this board has the independence and dedication to its stockholders to conduct an open and honest search for a new leader with the vision and creativity to meet the challenges ahead," said Gold and Disney in their statement. "At this point in time, the board's credibility is in question due to reports that they have yet to interview a single outside candidate. Potential candidates, meanwhile, are indicating a lack of interest in the position because of delays in the search process and the uncertainty regarding when Mr. Eisner will leave the company.